Government panel proposes BSNL/MTNL/ITI merger

7 Apr 2011

Just over a month after reports that the Department of Telecommunications (DoT) had revived plans regarding a tie-up between state-owned operators Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL) could be back on the cards, India’s Economic Times is reporting that a government panel has recommended that such a merger would be beneficial for both parties. Further, in addition to proposing that the two telcos join forces, the panel investigating the matter has also suggested that government-owned hardware vendor Indian Telephone Industries (ITI) should be included as part of the enlarged entity. It is understood that, with the state having failed to sell off ITI despite numerous attempts, its inclusion in the proposed merger could help the vendor turn around its loss-making operations. Commenting on its proposals the Board for Reconstruction of Public Sector Enterprises (BRPSC), a body which advises financially troubled state-run companies, noted in its report: ‘The board strongly recommends the merger of ITI with BSNL, or its takeover by BSNL as a separate subsidiary, thereby ensuring strategic vertical integration. This should enable BSNL to combine service providing with manufacture of the products and thus emerge as a leading global player as some of the Chinese companies have done in recent times.’

India, Bharat Sanchar Nigam Limited (BSNL), Mahanagar Telephone Nigam Limited (MTNL)